How Taxpayers Ended Up Contributing to $1.3M Economic Development Study

April 23, 2019

Author: Rachel Barnhart

Nonprofit agencies scramble for grants from governments and foundations, employing grant writers, development experts and even lobbyists. These funds don’t come easily.

Unless you’re Robert Duffy.

The former Rochester mayor and lieutenant governor is CEO of the Rochester Chamber of Commerce and the co-chair of the Finger Lakes Regional Economic Development Council (FLREDC), which as an arm of Empire State Development.

Last fall, the Chamber quietly commissioned a study of local economic development efforts, including the work of FLREDC and Upstate Revitalization Initiative (URI). The Chamber hired Boston Consulting Group (BCG) for a whopping $1.3 million. Wegmans and Constellation Brands kicked in $500,000. Paychex and M&T Bank also contributed.

(Danny Wegman is a former co-chair of FLREDC and Constellation Brands CEO Robert Sands is Chairman of Rochester Chamber of Commerce.)

Emails obtained through open records show in late October, the Chamber was scrambling to raise enough money to pay for the study. Duffy and Ginny Clark, an executive with Constellation Brands, turned to Vinnie Esposito, Regional Director for the Finger Lakes Office of Empire State Development.

Esposito wrote to them that he was able to secure a $100,000 grant by simply making a call. He wrote to Clark, Duffy and the CEO of Greater Rochester Enterprise, Mark Hurlbutt, “FYI, I’ve spoken to Howard Zemsky and also John Maggiore in the Governor’s office. We/NYS are willing to contribute $100K from the URI towards the study, as long as that still of interest. The only string is that we’d like to make sure the scope of work includes some analysis of the URI implementation/impact (to date), which I believe they were planning to do anyway.”

The Chamber’s formal application for the $100,000 – which was already secured — came in days later on November 8.

Duffy’s co-chair of FLREDC, Monroe Community College President Anne Kress, was not happy when she learned about the study on October 18 via an email.

Anne Kress wrote, “I am concerned that as the FLREDC co-chair, I received no information about this document or presentation prior to receiving this email even though it specifically references the URI. This is doubly concerning given that MCC is the region’s largest and most effective workforce educator.”

Duffy wrote back, “You will certainly be given ample opportunity to weigh in with this process. The only people who received this document before the meeting were the Chamber and GRE Executive committees, the CEO’s/board chairs of both Visit Rochester and RDDC, and Vinnie. Our meeting yesterday was to present an overview of the process and gauge support to hire BCG ‐ from the respective CEO’s. Rob and Danny have pledged $500K and we have to raise another $500K to bring in BCG. We are not asking government for money although we may ask ESDC to consider a contribution.”

(Empire State Development is a government agency, so that’s taxpayer money!)

Duffy wrote in the Rochester Business Journal in January that the BCG study would show a lack of collaboration and common vision. “It’s time to take a step back, pay attention to the data and advice given by the BCG report, and look at different ways to make some uncomfortable but necessary decisions to improve our outcomes,” he said. The BCG study, he noted, would point out the economy is stagnant and economic development efforts too reliant on state funding.

This episode is concerning for several reasons.

Duffy had a major conflict in asking for this money. He was the awardee of the grant and the co-chair of a council that awards grants. (Many regional council members across the state have conflicts.)

There was no transparency or approval process in awarding the grant.

The public may not have the right to see the findings of this publicly-funded, but privately-owned study.

The study will be billed as an act of philanthropy by Sands and Wegman, but we must be wary. Former U.S. Labor Secretary Robert Reich points out these kinds of gifts are “an attempt to direct your private assets for some public influence.” The study will be hailed as transformative and governments will be pressured to adhere to the recommendations.

Well-connected and wealthy people pulled strings to get a grant many of our local nonprofits would have to jump through numerous hoops to receive – if they have access to those kinds of grants at all. It’s also unseemly for billionaires to ask taxpayers for help funding such an expensive study.

Sands and Wegmans leading a group of business leaders in a $1.3 million effort to diagnose what’s wrong with Rochester reeks of the old Rump Group. The Rumpers, a group of prominent business and university leaders, appointed themselves the area’s great problem-solvers. We should eagerly read the BCG report and thank the contributors. But we need to remember they’re not in charge.

Or are they?

This isn’t the way a democracy is supposed to work – something we don’t need the Boston Consulting Group to tell us.